Tackling the debt a little at a time

Republicans have retreated twice this month on the fiscal front, but they aren’t giving up. After having been forced to swallow higher tax rates and a debt ceiling increase, they’ve regrouped behind a new demand: balance the federal budget in 10 years.

That’s not going to happen, but no matter: The GOP is making an ideological statement. President Barack Obama should counter with a realistic fiscal goal, one Congress could actually achieve this year: Stop the debt from growing.

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It’s finally dawned on Republicans that control of the House doesn’t entitle them to dictate the nation’s agenda. Still, they want to keep debt reduction front and center in Washington, because it’s a proxy for what conservatives regard as the nation’s overriding priority: shrinking the federal government.

But Obama won the election, and he has other ideas. One of them is not letting the right hold America’s economy hostage to demands for brutally deep cuts in public spending. The public backs the president, as evidenced by polls showing Americans believe GOP rigidity is the chief obstacle to a fiscal compromise.

Obama thus has the upper hand, and he’s using it to restore a sense of proportion to the fiscal fight. While reducing the debt is a long-term imperative, the nation’s immediate challenge is to speed economic recovery. That means fiscal retrenchment must be phased in gradually, so that spending cuts and tax hikes don’t choke the economic growth we need to put people back to work and refill the government’s coffers.

So what should the president seek to accomplish in the coming battles over the sequester and dueling House and Senate budget resolutions? A “grand bargain” that reverses the growth of our $16 trillion national debt seems as elusive as ever. But if U.S. political leaders won’t fix the debt in 2013, they must prevent it from growing.

Freezing the debt at present levels (around 73 percent of GDP) won’t be easy, either. Given what’s already been put on the negotiating table by Obama and House Speaker John Boehner, however, it wouldn’t require acts of political self-immolation from either side. Most important, it would reassure Americans that their government isn’t hopelessly dysfunctional and would boost investor confidence in our economy’s fundamental soundness.

An agreement to “stop the debt” would sustain the momentum of fiscal reform in Washington without slamming the brakes on economic recovery. In 2011, Congress passed the Budget Control Act, which will cut federal discretionary spending (including savings on interest) by about $1.7 trillion over the next decade. The fiscal cliff deal, which raised tax rates on the very wealthy, will add more than $600 billion. So we are already more than halfway toward the $4 billion target that leading budget experts say is required to shrink the debt to a more sustainable 60 percent of GDP.